3rd Quarter 2022 Client Letter

'Bad News Is Good News' for the Market: Consumer Demand Needs to Cool Off and Inflations needs to come down.

I hope you and your family members are safe and healthy. Well, as per my previous quarter letter I mentioned that volatility is anticipated to continue and so far 2022 has proven to be challenging for all investors. Looking at annual returns, there have been only two calendar years when stocks and bonds were both down, 1931 and 1969.

The lingering inflationary impact of the global shutdown, government stimulus and supply chain disruptions have forced central banks to be more restrictive. The knock-on effects of more restrictive policy have also caused significant currency stresses across non-US markets. The net effects have been reduced growth forecasts and negative performance across all major asset classes in 2022. Going forward, Chairman Powell’s recent commentary, which suggests a faster pace of interest rate hikes and a higher terminal rate than previously thought, could continue to place pressure on the economy as well as stock and bond prices.

As fall arrives and brings cooler welcomed temperatures earnings season begins for the equity markets.

History suggests that US earnings can survive inflation and we think the most compelling bullish argument is that corporate earnings in the US have so far remained resilient. Earnings estimates for the third quarter have already come down meaningfully, but longer-term estimates have remained resilient. In our view, stock prices are likely to remain volatile but range-bound until earnings visibility improves.

We believe maintaining a focus on long-term plans is critical in these market environments. Impatient investors who panic, could lose more money to inflation through lost purchasing power if they step out of the market or deviate too far from their long-term plans.

I believe every solid relationship should center on open communication. You have several options to access the information you need to know about your portfolio, my firm, Raymond James and the financial markets. In addition to our in-person meetings and one-on-one calls, we'll also communicate with you through other channels, such as our website, newsletters and social media. You have already been receiving regular updates and emails from me. These communications are designed to provide you with insight into the ever-evolving financial markets and help build the confidence that comes from working with an experienced advisory team. If you haven't already done so, I encourage you to go to my website to learn more about my firm and access some of the recent research and articles available to you. I also utilize social media channels such as Linkedln. If you already have an account on Linkedln consider following me. These channels provide an excellent way for me to keep you up to date with relevant, timely news. Please let me know how you prefer to receive important communications and how frequently. We'll do our best to deliver. Guiding you toward financial independence is a collaborative process, and I hope you feel comfortable reaching out to me whenever you have questions, concerns or even new ideas to help me better serve you.

Elliot Weissmark, CFP®, CPFA
Senior Vice President, Investments

Any opinion are those of Elliot Weissmark, CFP @, CPFA and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.